I've built consulting firms through three major technology waves over 30 years. Each time, the same pattern emerged.
New technology arrives. Project delivery times shrink. Clients expect the same results faster.
When I started Portal Solutions in 2002, a typical system integration took months. By the time I sold to Withum in 2017, cloud computing had compressed those timelines to weeks. Now AI does it in days.
The consulting industry faces the same repricing crisis already hitting legal services. Legal departments expect AI to significantly impact billable hours, with billable work facing 74% automation potential.
Consulting follows the exact same trajectory.
The Commoditization Trap
Three forces are crushing traditional consulting margins simultaneously.
Technology becomes easier to access and implement. Cloud computing removes infrastructure barriers. AI puts implementation knowledge at everyone's fingertips.
The result? Project sizes keep shrinking. Consulting value diminishes because information that was once exclusive is now widely available.
I watched this acceleration hit hyperspeed in 2024 and 2025. What took my team weeks now takes AI-assisted competitors days.
Firms switching to fixed-price projects try to escape the time trap. But without institutional memory, they can't estimate delivery accurately or control scope creep.
The Subscription Revolution Playbook
The solution mirrors software's transformation from licensing to subscription models. When software moved to the cloud, providers had to rethink value delivery across time spans.
Consulting firms must make the same leap. Move from time-and-materials to outcome-based pricing. Create recurring engagements that monetize private knowledge for client success.
This means becoming knowledge-as-a-service providers with sticky relationships and self-service options.
Boston Consulting Group already generated AI services worth $2.7 billion in 2024 from revenue streams that didn't exist two years ago.
The Extinction Warning Signs
Consulting leaders need to monitor three critical metrics immediately.
Diminishing margins signal commoditization. Shrinking project sizes indicate clients expect faster delivery. High project churn means you're not providing long-term value.
Firms ignoring these signals face extinction. AI-native competitors will enter the market offering comparable outcomes at lower prices with greater transparency.
The competitive advantage shifts to firms that can access their institutional memory instantly and efficiently.
The Transformation Roadmap
Two concrete steps start this transformation immediately.
First, rethink your pricing model. Move to outcome-based pricing with fixed delivery and higher margins. If you can deliver $100K in savings or added value, price accordingly with ROI payback in 6-9 months.
Second, enable instant access to your institutional memory. Your delivery team needs to tap decades of problem-solving experience rapidly and efficiently.
The quick win? Implement institutional memory access for your knowledge base. This becomes your private layer that AI democratization can't replicate.
Consulting firms have a choice. Lead this transformation proactively or respond reactively as market dynamics shift.
The billable hour's last stand is happening now. The firms that survive will be those that recognize time has become worthless, but institutional memory has become invaluable.